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An early leader in applying the most sophisticated technology to trading, D.E. Shaw became one of the country’s largest hedge funds, ranking fifth in the U.S. in 2009. (Last year redemptions reduced its rank to the top 20.) Founded in 1988 by David Shaw, a computer science professor at Columbia University, the fund, headquartered in mid-Manhattan, also developed a reputation for extreme secrecy.

Shaw has stepped back from day-to-day management of the hedge fund and is directing his energies to D.E. Shaw Research which has grown to more than 70 researchers working with 16 supercomputers focused on computational biochemistry since it was founded in 2002. In interviews with Michael Peltz, an editor at Institutional Investor, which were published in Alpha and Absolute Return (AR Magazine) in 2008 and 2009 Shaw explained feeling dissatisfied on his 50th birthday and taking a friend’s advice to pursue what he loved.

He is now the Senior Scientist at D.E. Shaw Research. The group did not respond to a request for an interview, but its Web site has some details and publications describing what it does -- only a fraction of it comprehensible to this non-scientist.

Much of the center’s compute power is being used to simulate molecular dynamics in individual proteins and in larger macromolecular complexes. While computer simulation won’t replace biological experiments, it can offer a view “at level of spatial and temporal detail inaccessible through experiment alone.”

The research center has a computer, named Anton, which can run simulations at the atomic level for periods of a millisecond. The results have been validated against other simulations and against the results of experiments.

The hedge fund, which I wrote about several years ago, developed its own networks and computers to reduce latency. Some of the same skills are apparently being applied to Anton which is described as massively parallel with tightly integrated communication hardware: “...the total critical-path communication time for an Anton MD simulation is less than four percent of the next fastest MD platform.” The center has 25 people working in hardware design.

The time frames in biology make high frequency trading look tame. One of the center’s reports notes that “The highest atomic vibrational frequencies limit each time step to a few femtoseconds, such that simulating even a microsecond requires nearly a billion sequential time steps...” Anton was designed to support timescales as long as a millisecond. That has required novel parallelization techniques and software to control the computations. The center adds:

"Most significantly, Anton's communication subsystem provides over 300 gigabits per second of bandwidth per node, message latency in the hundreds of nanoseconds, and support for word-level writes and single-ended communication.”

It would be fascinating to learn if any of the center’s technology is flowing into the hedge fund.

In addition to his work at the center, Shaw has also returned to Columbia where he holds appointments as a Senior Research Fellow at the Center for Computational Biology and Bioinformatics at Columbia University and as an Adjunct Professor of Biomedical Informatics at Columbia's medical school.